Limits On The Amount Of Security Deposit
Unlike most states, Colorado has no limit on the amount of security deposit a landlord can collect from a tenant. This is favorable for landlords, especially those that provide furnished housing and need to collect a larger security deposit.
This may change in the future, however. Most states regulate security deposits more strictly than Colorado does, so do not be surprised if Colorado changes its laws in the future. The national trend is for laws to become more tenant friendly. Most states have the following:
- Shorter time limits on the return of deposits
- Escrow bank account requirement for the holding of security deposits
- A dollar limit equal to a maximum of one month's rent
Time Limits For Return Of Security Deposit
One Month Is The Default
Colorado’s default time limit for the return of a security deposit is one month. The time can be extended to a maximum of 60 days, if permitted by the lease. This is the longest time period of all states. To enforce the longer time period, the lease needs to be written and signed by the tenant.
It is important to note that if a landlord takes longer than one month under the statute (or longer than the time permitted by a written lease), the landlord loses all rights to retain any portion of the deposit. The entire security deposit must be returned to the tenant.
The Statement of Damages
If a landlord retains any portion or all of the security deposit, the landlord must provide the tenant with a statement of damges. The statement of damages must list the exact reasons for the retention of any portion of the deposit.
Furthermore, when the statement of damages is delivered to the tenant, it must be accompanied by payment of the difference between the security deposit and the amount retained for damages, if any. A statement of damages is not necessary if the landlord retains no portion of the security deposit.
When mailing the statement of damages, C.R.S. § 38-12-103(1) states that the landlord is deemed to have complied with the law by mailing the statement and any payment required to the last known address of the tenant. Do this within the time limit.
Normal Wear And Tear
Do not retain money for normal wear and tear. Landlords commonly retain part of a tenant’s security deposit for normal wear and tear, even though C.R.S. § 38-12-103(1) states:
No security deposit shall be retained to cover normal wear and tear.
What is normal wear and tear? Per C.R.S. § 38-12-102(1) “Normal wear and tear’ means that deterioration which occurs, based upon the use for which the rental unit is intended, without negligence, carelessness, accident, or abuse of the premises or equipment or chattels by the tenant or members of his household, or their invitees or guests.”
The Landlord has the burden of proving its claim for damage to rented residential premises. See Kirkland v. Allen, App.1984, 678 P.2d 568. Thus, the landlord should retain money for only those damages with the landlord can prove are not normal wear and tear.
The landlord can retain money for nonpayment of rent, abandonment of the premises, or nonpayment of utility charges, repair work, or cleaning contracted for by the tenant.
Here are some best practices for landlords regarding security deposits
- Written Lease. Use a written lease, and include in the lease a time period (maximum of 60 days) that you can retain a security deposit. LeaseRunner’s Colorado Lease Agreement contains the maximum limit of 60 days. Also, include a condition of the premises form with your lease to have the tenant agree upon pre-existing damages. LeaseRunner provides a Condition of the Premises form as well.
- Take Pictures. Take pictures of the premises before the tenant moves in, and take pictures again after the tenant moves out.
- Retain for Damages. Do not retain for normal wear and tear. Retain for only those damages you can prove were caused by the tenant.
- Include the Statment of Damages. Send a statement of damages to your tenant. Start with a blank page and call it "Statement of Damages" and account for each item of damage. The format does not matter, but do include the exact reasons (i.e. specific details) for each line item of damage. Include pictures, receipts, or other proof available. Keep copies of everything.
- Use Certified Mail. Use certified mail to prove that you mailed the statement of damages with remainder of security deposit (if applicable) to the last known address of tenant before the end of the time period.